IEEJ：February 2016 © IEEJ2016

Opportunities in Iran Oil and Gas
Sector in the Post-Sanction Era
Presented by Dr. Fereidun Fesharaki, Chairman, FGE GroupThe Institute of Energy Economics, Japan (IEEJ)Tokyo, February 3, 2016

IEEJ：February 2016 © IEEJ2016

FGE as a Global Consulting Group
Main and Satellite Offices
FGE provides studies and advisory services to governments, national oil and gas companies, major oil and gascompanies, independent oil and gas companies, financial institutions, international and intergovernmentalorganizations, utilities, consultancies, and engineering design firms. FGE provides consulting services to over 270
clients globally.

HQIn-Depth Focus
on the Middle
East Oil & Gas

Main FGE Offices

2Satellite Offices

www.fgenergy.com

IEEJ：February 2016 © IEEJ2016

FGE Services on Iran

Iran Commercial Advisory
Service•

Within the Upstream Oil and Gas, Downstream Oil and Refining, Gas, Petrochemicals and Power Sectors, weoffer Commercial Advisory Services which can be created in a bespoke manner to meet the client's advisoryneeds. In addition to the many topic areas within each sector from which to select, this service includes:––•Tailored reports and ad-hoc studies
In-house briefings

FGE’s Iran Commercial Advice provided across all building blocks includes:––––––––Key Introductions
Relationships and Stakeholder Management
Potential Investment Opportunities
Project Identification and Screening
Economic Assessment and Feasibility Studies
Deal Negotiation and Strategy
Risk Assessment and Management
Guidance Through Political and Regulatory Environment

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IEEJ：February 2016 © IEEJ2016

FGE Services on Iran

Iran Oil & Gas Retainer Service•

FGE’s Iran Oil and Gas Service builds upon decades of research, consulting, and professional networking toprovide our customers with a detailed and comprehensive analysis of Iran’s oil and gas industry.

•Key Benefits of This Service:–––––––

Accurate, reliable, and consistent industry information provided.
Historical annual data (back to 1975) as well as monthly trade data since January 2012.
Short-term forecasts for oil and petroleum supply.
Long-term forecasts for oil, petroleum products, and natural gas supply/demand to 2030.
Latest monthly data on Iran's oil and gas sector.
Vast insights on Iran's oil and gas infrastructure.
Detailed insights on upstream and downstream developments in the region.

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IEEJ：February 2016 © IEEJ2016

A new chapter is ready to begin for Iran’s energy sector

1. Upstream Oil& Gas

4. Gas &PetrochemicalInvestment
Opportunities

3. Refining
Industry5

2. Oil & ProductTradingIEEJ：February 2016 © IEEJ2016

Opportunities in the Iranian Upstream Sector

Oil

Natural Gas

Development of 29 oil fields(21 onshore and 8 offshore fields)

Development of 21 gas fields(15 onshore and 6 offshore fields)

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IEEJ：February 2016 © IEEJ2016

Iran’s Upstream Sector: How fast it can be developed?

• Iran hopes to attract US$20-30 billion of foreign investment into its oil and gas sector with its
new contract model, once oil sanctions are lifted.

• With the development of the listed oil fields, Iran hopes to bring nearly 1 mmb/d of additional
crude oil into the market over the next 4-5 years. The ambitions for the gas sector are evenmore robust, with a goal to increase production from new gas fields by over 15 bscf/d.

• In the new upstream contract model, Iran has tried to address the buy-back contract
shortcomings and has made its best efforts to make the structure more attractive at least
compared with the existing Iraqi upstream contracts.

• However, this will be mostly a European/Asian show as the US companies will not participate.
Not all offered blocks will be attractive for IOCs. There will be huge emphasis on investment in
the already discovered fields to slow down decline rates and to improve production prospects.

• Iran is a gas province and not an oil province in the Middle East. The introduced list of oil andgas projects indicates that Iran may not be able to increase oil production capacity
substantially, but there will be huge potential for incremental gas production.

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IEEJ：February 2016 © IEEJ2016

Oil and Product Trading
Iran’s Crude Oil Exports

Iran's Petroleum Product Trade

2.5

1.0mmb/dmmb/d

2.0
1.5

0.5

1.0
0.0
0.5

LPG

ChinaNaphtha

2015

2013

2011

Oct-15

Jul-15

Apr-15Jan-15India

Gasoline

2025

Japan

Oct-14Jul-14Apr-14Jan-14Oct-13

S. Korea2020

TurkeyJul-13Apr-13Jan-13Oct-12

Jul-12EU-0.52017

OthersApr-12

Jan-12-Kero/Jet

GasoilFuel oil• Iran has pre-agreed sales commitments for some 500 kb/d. Another 500 kb/d could be sold by yearend,
depending on the market circumstances.

• Iran is expected to emerge as a large product exporter in the region, exporting some 1 mmb/d of petroleum
products by 2025.

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IEEJ：February 2016 © IEEJ2016

Opportunities in the Refining Industry

RefineryUpgrading andModernization

Some 1 mmb/d ofcondensate splitters(360 kb/d underconstruction, and 480
kb/d planned withprivate players).

Condensate
Splitter Projects

Minimizing fuel oil
output by maximizing
gasoline and middledistillates.

Oil and ProductStorage

9

Facilitating Iran’sexports and divertingsome of regional
product trade flows
through expanding its
storage capacity.

IEEJ：February 2016 © IEEJ2016

Opportunities in the Gas and Petrochemical

Gas
ProcessingPlants

Attractive feed gas
price createscompetitive advantage
for Iranian petchem
projects.

Gas-based
Petrochemical
Projects

Construction of several gas
processing and NGL plants
will be required to handle
huge increase in gas
production.

Gas Export
Pipeline

LNG Plants

10

Iran’s gas export
strategy is to supply
the neighboringmarkets via pipeline.

IEEJ：February 2016 © IEEJ2016

Will Iran Export LNG?
• As the EU and US nuclear related sanctions
have been lifted, Iran will be able to resumeconstruction of the Iran LNG project and theproject is now likely to become operationalsometimes in 2021/2022.

• Although the project is still on hold, Iran has
spent nearly US$2.5 billion on this projectsince 2009, therefore Tehran remains intent on
developing it.

• With lifting sanctions, there may be few otheroptions for Iran to export LNG in the future.
These options may be:11‒

Utilization of Qalhat LNG in Oman

‒Possible use of the Das Island LNG facilities inAbu Dhabi.

‒Few small/mid scale LNG projects which each
may have 1-2.5 mmt of liquefaction capacity.

IEEJ：February 2016 © IEEJ2016

Thank You
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